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Transition from MGNREGA to VB-G RAM G Triggers Sharp Drop in Rural Work Generation

Rural employment generation in India has experienced a steep downturn following the Union Government’s shift from the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) to the Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin), or VB-G RAM G. Figures from the first four months of the 2026-27 financial year indicate a 43 percent fall in work generated compared to the average of the prior two years, despite higher budgetary allocations.

What Happened

Parliament passed legislation in December 2025 to replace MGNREGA with VB-G RAM G, with the Rural Development Minister initially announcing an implementation date of April 1, 2026. However, the operational rules were not finalized in time, leaving MGNREGA in place by default through the summer months. Draft rules were published on May 22, 2026, followed by final rules and wage rate notifications on June 30, which scheduled the official handover for July 1, 2026.

During this April-to-June transition, significant administrative confusion took place. In multiple districts, officials refrained from initiating new projects, leaving several areas without work during the peak agricultural slack season. Although July 2026 saw VB-G RAM G come into effect, employment generation reached only an estimated 8.3 crore to 9 crore person-days, representing a decline of more than 40 percent compared to July 2025.

Key Highlights

  • Total employment generation between April and July 2026 fell to 70 crore person-days under both schemes combined, down from 128 crore in 2024-25 and 119 crore in 2025-26.
  • The combined 2026-27 VB-G RAM G budget, including State contributions (typically 40 percent), was planned at around ₹1.5 lakh crore, up from the Union Budget allocation of ₹95,692 crore.
  • In 10 of 19 major States, employment generation declined between 60 percent and 85 percent, with activity reaching a virtual halt in Madhya Pradesh, Uttar Pradesh, and Jharkhand.
  • The wage rate notified on June 30, 2026, set a baseline of ₹300 per day, keeping pay roughly unchanged in real terms compared to the earlier MGNREGA rate of ₹100 per day at 2009-10 prices.
  • While the Ministry of Rural Development pointed to temporary suspensions under Section 6 of the Act in a few States, the decline remained pronounced across the country even when excluding those States.

Why This Matters

The first four months of the financial year normally account for nearly half of India’s annual rural job creation, providing essential income support during the agricultural off-season. Because rural wage norms remained practically unchanged in real terms, the failure to expand person-days despite a larger projected budget of ₹1.5 lakh crore has resulted in a direct shortfall of intended employment support in some of India’s poorest States.

What to Watch Next

Future operational delivery will depend on whether authorities can roll out the projected ₹1.5 lakh crore expenditure for 2026-27. Attention will also center on how worksites adapt to facial recognition attendance mandates and how the Centre-State cost-sharing structure functions in practice across the remaining months of the financial year.

Frequently Asked Questions

What caused the delay between the passage of the VB-G RAM G Act and its launch?

Although the transition was slated for April 1, 2026, the required operational rules had not been drafted by the Ministry of Rural Development. The draft rules were issued for consultation in late May, and the final rules were released at the end of June, pushing the formal start to July 1, 2026.

How did employment numbers in early 2026-27 compare to previous years?

Between April and July 2026, employment output stood at 70 crore person-days, a 43 percent drop compared to the average of 128 crore person-days generated in 2024-25 and 119 crore person-days in 2025-26 over the same four-month window.

Did the decline affect all States equally?

No. While States like Andhra Pradesh, Assam, and Telangana experienced relatively modest declines, most States saw drops exceeding 40 percent, and 10 out of 19 major States recorded decreases ranging between 60 percent and 85 percent.

Source: Analysis by Jean Drèze and Mohammad Zameer, published in The Hindu.